Once upon a time foreign ownership of domestic banking sectors was deemed a “rating strength” in central and eastern Europe. Before the financial crisis, foreign banks had demonstrated their willingness and ability to support their subsidiaries, according to Fitch associate director Michele Napolitano. But those days are now long gone.
It seems like more or less anything can be deemed an asset class these days. Here’s the latest one from Citigroup analysts: ‘Carbs’. No that’s not McDonalds and Coca Cola, but Canada, Australia, Russia, Brazil and South Africa, i.e. the world’s top commodity players.
Here we go again. Yet another resource company from the former Soviet Union is seeking a premium listing in London and inclusion in a FTSE UK index. The company in question, Kazakhstan-based oil and gas producer Zhaikmunai, is the latest in a string of firms to consider redomiciliation and swapping its existing GDRs for primary shares thereby opening up the possibility of joining the FTSE indices.
Whichever way you look at it, the eurozone crisis is ugly. But looking at the overall indebtedness of peripheral economies instead of focusing solely on their public sector debt offers an interesting perspective on the problem, according to Goldman Sachs economist Lasse Holboell Nielsen. Here’s why:
Europeans tend not to understand American football, not least because the ‘ball’ seems to rarely make contact with the ‘foot’. But let’s hope Mariano Rajoy, the candidate expected to win Spain’s general election on Sunday, knows the game, or one move in particular: the ‘Hail Mary’, which is a long forward pass made in desperation at the end of the half with only a small chance of success.
The dreaded lost decade that is staring the developed world in the face might not be so bad after all. At least according to Citigroup’s glass-half-full equity strategy team. Lost decades, defined as 10-year periods of painfully slow growth (circa 1 per cent per annum), are always painful for the wider economy but they need not be for equity investors.
Eleven days after MF Global filed for bankruptcy and the search party for around $600m of customer funds is still hard at work. But it wasn’t meant to be this way. Client funds are supposed to be segregated in such a way as to be easily identifiable and transferable in the wake of exactly this type of event. The ability to protect client assets, and by extension minimise disruption to the markets, is at the heart of ongoing reform efforts prompted by the financial crisis.
The drama in the Italian bond market in recent days has naturally raised a lot of questions, not least as to how sustainable the current financing levels are. Citi’s rates strategy boffins have been mulling “fair value” for BTPs, including where bond yields could go if the situation is stabilised.
On Tuesday we asked what rules should govern entry to the FTSE UK indices. We launched our consultation in response to a similar survey from the FTSE Group, which sought market feedback on the free float rules for its various indices. This followed investor outcry over oligarch-owned Russian companies (Evraz, Polyus Gold and Polymetal) seeking to list on the main market while keeping control out of public hands.
Will the eurozone survive? If so, in what guise? If not, how will it be broken up and what might the consequences be? These, among others, are some of the key questions currently occupying the minds of the financial great and good.
The story so far. Last week, FTSE Group launched a consultation on the free float rules for its various indices. That followed an outcry from investors concerned about the wave of overseas companies seeking to list on the main market while keeping control out of public hands.
Here’s something to ponder for the commute home, via Deutsche Bank: One topic of conversation with investors is why realized volatility has been similar to levels during 2010 (the onset of the European sovereign crisis), whereas investor’s perceptions of the current crisis (as well as option implied volatility) suggest the crisis is closer to 2008/09 in scale and severity. Figure 7 makes it clear that current realized volatility (based on a standard “close-to-close” measure), is broadly in line with 2010 and early 2008 volatility spikes.
Call it the enduring mindset of the Cold War preserved by over 50 years of James Bond-esque spy thrillers, or blame it on more rational concerns about the integrity of London’s market infrastructure. Whatever the reason, the three Russian companies currently seeking a place in the FTSE 100 have received a somewhat lukewarm reception.
ENRC could have saved itself $600m and some potential blushes, at least for now. Instead of asking independent shareholders to vote on a plan to buy the remaining 75 per cent of thermal coal producer Shubarkol from its oligarch founders, the company will instead request that the meeting be adjourned.
You can say what you want about the achievements of the WTO; it sure is nice to be part of the club. Certainly that is what the Kremlin will be thinking this morning after Russia cleared the final hurdle to joining the 153-nation trade organisation after 17 years of trying.
Something to take G20 Cannes delegates’ minds off Greece… How’s this for evidence that the emerging markets growth story is overblown? Of all the G20 countries, the US would have given you the greatest equity returns over the past year, not Brazil or China.
If you can tell a little about someone from the books they read, you can tell a lot about them from the books they write, especially if they’re a central banker. Morgan Stanley economist Spyros Andreopoulos has dipped into the library at the “Global Central Bank” and draws comfort from the number of “depression economics” tomes on its shelves. In case you were wondering, some of the “scholars” are:
Where would financiers be without metaphors? Let’s take Citi as an example — although we are sure there are worse offenders. In Tuesday’s FT, Citi’s chief economist, Willem Buiter, called for a bigger ‘bazooka’ to boost the firepower of the EFSF. This comes just days after he predicted the bazooka would turn out to be a ‘peashooter’ and his colleague Michael Hampden-Turner compared the EU’s two-pronged approach to providing investors with sufficient confidence to buy European bonds (CDS- style guarantees on bonds and a plan to create an SPV) as like a ‘Swiss cheese’.
If you were expecting widespread easing of policy rates across the emerging world, think again. Since the end of August three EM central banks have cut rates — Brazil, Israel and Indonesia – but don’t go expecting much more monetary easing, Citi has cautioned in a recent report.
Uh-oh, yet another Russian company is considering a premium listing in London. The FT reports on Monday that UralKali, which became the world’s largest potash producer by volume after merging with local rival Silvinit earlier this year, is considering joining London’s elite. The company, which already has GDRs in London, could target a premium listing paving the way to inclusion in the FTSE indices.